Families First Coronavirus Response Act Summary
Last night the President signed into law a sweeping legislative package in response to the COVID-19 epidemic called “The Families First Coronavirus Response Act.” The Act contains leave provisions applicable to private employers with fewer than 500 employees, as well as some governmental employers. The act also provides some important relief for individuals who are off work for reasons related to COVID-19 and would otherwise be without pay. The legislation expands the Family and Medical Leave Act (FMLA) and the Paid Sick Leave Act. The Act and its provisions will go into effective by April 2, 2020. Below is a summary of the final version of the legislation:
Emergency Paid Sick Leave Act – Effective April 2, 2020
- Reasons For Paid Sick Leave – The new Act allows an eligible employee to take paid sick leave because the employee is:
- subject to a federal, state or local quarantine or isolation order related to COVID-19;
- advised by a health care provider to self-quarantine due to COVID-19 concerns;
- experiencing COVID-19 symptoms and seeking medical diagnosis;
- caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
- caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Notably, caring for another who is subject to an isolation order or advised to self-quarantine as described above is not limited to just family members.
- Eligibility – This provision requires employers with fewer than 500 employees to provide full-time employees (regardless of duration of employment) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above). An employee may elect to use either paid sick leave under the new Act or any paid leave (i.e., vacation, sick leave, PTO) they may have accrued to date. An employer may not force an employee to use one over another. The Act provides an exception for employers who are healthcare providers or emergency responders at their election.
- Cap on Paid Sick Leave Wages – Another significant change to this Act places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
- Carryover and Interaction with Other Paid Leave – This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.
- Calculating Rate of Pay – Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (summarized above).
Effective Date and Expiration – This program will become effective 15 days after it is enacted by President Trump and remain in effect until December 31, 2020.
Emergency Family And Medical Leave Expansion Act- Effective April 2, 2020
- Coverage and Eligibility – All employers with fewer than 500 employees may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason on a temporary basis.
- Which employees are eligible? Any employee who has worked for the employer for at least 30 days prior to the designated leave may be eligible to receive paid family and medical leave.
- The Secretary of Labor has the ability to exclude certain healthcare providers and emergency responders from the definition of employee by allowing the employer of the providers/responders to opt out, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business.
- Reasons for Emergency Paid Leave – An employee may take up to 12 weeks of job-protected paid leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency.
- Paid Leave – The first 10 days of Emergency FMLA may be unpaid. During this 10-day period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period. After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee. An employee may elect to use either paid sick leave under the new Act or any paid leave (i.e., vacation, sick leave, PTO) they may have accrued to date. An employer may not force an employee to use one over another.
- Calculating Pay for Non-Full Time Employees – Employees who work a part-time or irregular schedule are paid based on the average number of hours the employee worked for the six (6) months prior to taking Emergency FMLA. Employees who have worked for less than six (6) months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.
- Job Restoration – Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downturn or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.
Tax Credits For Paid Sick And Paid Family And Medical Leave – Effective April 2, 2020
Employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave are entitled to a series of refundable tax credits. These tax credits are allowed against the employer’s portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.
Specifically, employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.
Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.
As the number of cases around the world grows, Landegger Baron Law Group is available to help you understand and assess the legal implications of COVID-19 for your business and your employees.